Question 1

If a monopolist is producing a quantity that generates MC = MR, then profit:

Accepted Answer

A)  is maximized. 
B)  is maximized only if MC = P. 
C)  can be increased by increasing production. 
D)  can be increased by decreasing production. 
A)  is maximized. 
B)  is maximized only if MC = P. 
C)  can be increased by increasing production. 
D)  can be increased by decreasing production.

Question 2

Price discrimination can never occur in oligopoly.

Accepted Answer

A) True 
 B)False

Question 3

The monopoly firm's profit-maximizing price is:

Accepted Answer

A)  given by the point on the ATC curve for the profit-maximizing quantity. 
B)  given by the point on the demand curve for the profit-maximizing quantity. 
C)  determined for the quantity of output at which MR > MC by the greatest amount. 
D)  found where MR > MC at the monopolist's profit-maximizing quantity of output. 
A)  given by the point on the ATC curve for the profit-maximizing quantity. 
B)  given by the point on the demand curve for the profit-maximizing quantity. 
C)  determined for the quantity of output at which MR > MC by the greatest amount. 
D)  found where MR > MC at the monopolist's profit-maximizing quantity of output.

Question 4

Use the following to answer questions:
Figure: Water Works  
-(Figure: Water Works) Look at the figure Water Works, which describes a small town's water works, a natural monopoly. If regulators allow the water works to charge the price that covers average total costs, consumer surplus will be:

Accepted Answer

A)  $1,600. 
B)  $1,400. 
C)  $1,000. 
D)  $2,812.50. 
A)  $1,600. 
B)  $1,400. 
C)  $1,000. 
D)  $2,812.50.

Question 5

A monopoly increases price by limiting the quantity supplied to a market.

Accepted Answer

A) True 
 B)False

Question 6

Use the following to answer questions:
Figure: PPV  
-(Figure: PPV) Look at the figure PPV, which shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much is consumer surplus when the monopolist maximizes profit?

Accepted Answer

A)  $20 
B)  $40 
C)  $80 
D)  $160 
A)  $20 
B)  $40 
C)  $80 
D)  $160

Question 7

Which of the following is TRUE?

Accepted Answer

A)  A monopoly firm is a price taker. 
B)  MR > P if the demand curve is downward-sloping. 
C)  MR = MC is a profit-maximizing rule for any firm. 
D)  In monopoly P = MC when profits are maximized. 
A)  A monopoly firm is a price taker. 
B)  MR > P if the demand curve is downward-sloping. 
C)  MR = MC is a profit-maximizing rule for any firm. 
D)  In monopoly P = MC when profits are maximized.

Question 8

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women. To use price discrimination to increase profits, the producers should charge higher prices to _____ because their demand is _____.

Accepted Answer

A)  men; elastic 
B)  men; inelastic 
C)  women; elastic 
D)  women; inelastic 
A)  men; elastic 
B)  men; inelastic 
C)  women; elastic 
D)  women; inelastic

Question 9

Suppose a monopolist reduces its price in an effort to expand output. If the price effect equals the quantity effect, then the marginal revenue will be zero.

Accepted Answer

A) True 
 B)False

Question 10

Consumer surplus is higher under a single-price monopoly than under a perfectly price-discriminating monopoly.

Accepted Answer

A) True 
 B)False

If a monopolist is producing a quantity that generates MC = MR, then profit:

Price discrimination can never occur in oligopoly.

The monopoly firm's profit-maximizing price is:

Use the following to answer questions: Figure: Water Works -(Figure: Water Works) Look at the figure Water Works, which describes a small town's water works, a natural monopoly. If regulators allow the water works to charge the price that covers average total costs, consumer surplus will be:

A monopoly increases price by limiting the quantity supplied to a market.

Which of the following is TRUE?

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women. To use price discrimination to increase profits, the producers should charge higher prices to _ because their demand is _.

Suppose a monopolist reduces its price in an effort to expand output. If the price effect equals the quantity effect, then the marginal revenue will be zero.

Consumer surplus is higher under a single-price monopoly than under a perfectly price-discriminating monopoly.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 13: Monopoly

If a monopolist is producing a quantity that generates MC = MR, then profit:

Price discrimination can never occur in oligopoly.

The monopoly firm's profit-maximizing price is:

Use the following to answer questions: Figure: Water Works -(Figure: Water Works) Look at the figure Water Works, which describes a small town's water works, a natural monopoly. If regulators allow the water works to charge the price that covers average total costs, consumer surplus will be:

A monopoly increases price by limiting the quantity supplied to a market.

Which of the following is TRUE?

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women. To use price discrimination to increase profits, the producers should charge higher prices to _____ because their demand is _____.

Suppose a monopolist reduces its price in an effort to expand output. If the price effect equals the quantity effect, then the marginal revenue will be zero.

Consumer surplus is higher under a single-price monopoly than under a perfectly price-discriminating monopoly.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Suppose the elasticity of demand for tickets to Broadway shows is 2.0 for men and 0.3 for women. To use price discrimination to increase profits, the producers should charge higher prices to _ because their demand is _.